According to The Financial Times, the Adani Group has recruited one of Wall Street’s toughest defence legal firms to take on US short seller Hindenburg Research, which accused the Indian conglomerate of stock manipulation and accounting fraud.
Details about Adani Group has hired US law firm Wachtell to take on Hindenburg
The news comes as billionaire Gautam Adani continues to reassure investors that his corporate empire is based on a solid basis and faces no financial risk.
According to the FT report, which cited four people familiar with the matter, the Adani Group has approached senior lawyers at New York’s Wachtell, Lipton, Rosen & Katz for a solution to the crisis it is facing after Hindenburg’s allegations significantly eroded its cumulative market capitalization and harmed investor sentiment.
The Adani Group’s hiring of Wachtell, one of the most expensive law firms in the United States, demonstrates the impact of the Hindenburg report on its listed corporations. Following Hindenburg’s charges, the firm is also under intense scrutiny from major financial institutions.
For decades, Wachtell has established a reputation as the most sought-after consultant by some of the top US corporations that have been targeted by activist investors or are facing a hostile takeover. While Adani Group denied Hindenburg Research’s charges and reacted with a 413-page rebuttal, it had little to no impact on investors and global financial institutions.
Adani Group has seven major publicly traded firms and three more publicly traded entities that it has purchased since last year. Following Hindenburg’s report, the stock prices of all of these companies plummeted dramatically. Adani Enterprises, the conglomerate’s flagship company, had to cancel its follow-on public offering (FPO). The report has also reduced the market capitalisation of important Adani Group listed firms by more over $110 billion.
By employing the US law firm, Adani Group is not only preparing to take on Hindenburg, but also convincing global financial institutions and investors that the company is still in good shape. To bolster market mood, Adani Group’s promoters recently prepaid $1.1 billion in loans in order to release pledged shares. It also intends to repay $500 million to select foreign banks ahead of schedule.
According to the FT, Wachtell was approached by Adani Group’s top lawyers at Cyril Amarchand Mangaldas, which is leading the industrial giant’s defence. According to persons named in the FT piece, Wachtell has been seeking further advising support for the Adani Group, notably from crisis communications firms. The US law firm will principally coordinate the group’s legal, regulatory, and public relations efforts.
The New York law practise was created in 1965 by partners who also gave the firm its name. The business has a reputation for taking on difficult corporate governance disputes.
Wachtell is regarded as one of the leading legal firms in the United States, having handled significant mergers and acquisitions, antitrust and shareholder disputes, and corporate restructurings. Given its exceptional reputation, it is also one of the most costly law firms in the United States.
It should be remembered that Twitter Inc retained Wachtell as it prepared to sue its current owner, Elon Musk. Meanwhile, Wachtell was part of a team that represented Elon Musk and Tesla Inc’s board of directors in a lawsuit launched by Tesla shareholders over the company’s acquisition of solar panel manufacturer SolarCity. It was also one of Elon Musk’s legal counsel on his effort to take Tesla private in 2018.